'From a party of protest to a party of power"? Anything is possible, but as things stand that remains unjustly unlikely. Never have the Liberal Democrats looked more plausible. Charles Kennedy's grown-up quietude chimes well in a world of political mistrust. They were right to hold back the ceilingful of yellow balloons - balloons are not the message. No shouting, no boasting, just a clutch of policies that are reported seriously this time.

Kennedy's team breathes experience and confidence - Menzies Campbell has more avuncular aplomb than Jack Straw; Vincent Cable's Treasury costings look more credible and he is considerably more chancellor-like than the eccentrically erratic Oliver Letwin; Steve Webb and Chris Huhne have brains and political acumen to match Labour ministers.

Never before has this party approached an election with a great vote-getting policy that is its alone: its stand against the Iraq war. The Lib Dems have Europe, climate change and green politics to themselves, questions of monumental importance lamentably sidelined by Labour.

But whether or not they deserve it, they are still nowhere near power. The electoral mathematics remain infuriatingly unfair. Professor John Curtice, a leading psephologist, gives them only a 10%-15% chance of landing themselves that elusive hung parliament at the next election. It's a sad irony that a hung parliament can only happen if the Lib Dems do rather worse and the Tories get a three-point lead. The better the Tories do, the closer the Lib Dems are to that statistical chance.

Iraq will change some votes. Lib Dem supporters who threw Labour votes to keep the Tories out may not do it this time, too angry over the war. But even so, says Curtice, with Labour some three points ahead, the chance of that hung parliament remains remote. What are the chances of the Lib Dems taking power - actually winning? "Zero." They would need to be at least six points ahead of the rest to do that, and that would take a political earthquake.

In truth, the realistic Charles Kennedy doesn't expect it either. He hopes to bag another 20 seats; he might make inroads into more Labour urban heartlands - Hartlepool, perhaps - but Tory seats are still his prime pickings. He aims for a good benchful more MPs in 2005, and then maybe power in 2009. But that dizzying date is beyond our short-termist political horizons. Who will be Labour leader then? Will there be a new model Conservative party? What wars, what US leader, what urgent issues global or domestic are not worth crystal-balling about?

In the here and now, political atrophy with an ever worse turnout beckons. Millions tell pollsters they would vote Lib Dem if the voting system let them. In a horseshoe-shaped Commons, proportional representation would make a coalition between Labour and the Lib Dems necessary, desirable and wise - the best of both parties. It works well in Scotland and now, with PR for Scottish local elections, it breaks up the old Labour rotten boroughs.

It is the standard tribal jibe to complain that the Lib Dems face both ways, depending on where they are standing. Peter Hain in these pages - an ex-Liberal himself - cranked out the stock insults that make politicians so disliked. How can Labour, with a straight face, call the Lib Dems two-faced? Labour has made facing both ways its ruling creed these past 10 years. It has been Blair's mercurial political genius to refuse to be defined left or right. "Both ways" is what the third way is, wooing the Mail and Murdoch into its big tent alongside as many strange bedfellows as can be coaxed. A touch of Janus may be necessary to seize that sacred centre ground now old party political loyalties are weak and voters fickle.

To be sure, there are important differences between Labour and the Lib Dems that go deeper than cultural and historic animosity. Labour remains the only party for the dispossessed, where its heartlands remain. Despite control of Liverpool, Newcastle and other urban territories, Lib Dem political roots are still in middle England. Lib Dem policy-making has a tin ear for questions of equality and class. They are nice people from nice places, and their policies are not aimed at the poor. Where in Kennedy's speech yesterday was Labour's great pledge to end child poverty?

He did deplore the injustice of a system that taxes the poorest 20% far more, proportionately, than the top 20% - but he then proceeded to redistribute cash to the middle classes, not to the unpropertied poor. So Lib Dem university-fee subsidies will go overwhelmingly to middle England families; the few of the poor who go to university already get their fees paid. Manual workers will pay taxes for lucky middle-class kids to go free.

Most elderly people get free care already; it is the better-off 40% who would also get free care under the Lib Dems. They are home-owners who want their well-heeled children to inherit those homes, making taxpayers (some of them poor, as Kennedy says) fork out instead. It would cost a hefty £2bn.

Council tax would be replaced with local income tax. But that removes the only property tax in a land where 70% of people hold most of their wealth in their property; a combination of the two would be fairer. To avoid too many losers, the local tax take will actually shrink, with even more contributed from Whitehall - which is an odd policy for a localist party. As for localism versus centralism, it's that old conundrum about which is worse: services run by central diktat or by postcode lottery.

Now all these are debatable questions, on which opinions vary wildly across the left-of-centre spectrum within Labour and within the Lib Dems, as much as between the two parties. Delegates' anger about the privatising tendency of the Lib Dem Orange Book suggests the same splits in Bournemouth this week that caused Labour backbench rebellions on these very themes. For David Laws, read Alan Milburn. Here are two parties play-acting a phoney war - and wondering why voters yawn.

The tragedy is that among Tony Blair's too many missed chances, he retreated from his promise to Roy Jenkins and Paddy Ashdown to heal this rift. It is the schism that made the last century the conservative century, despite a minority of conservative voters. Under proportional representation, even with a tame alternative vote system, it would be worth citizens' while to go out and vote for a party closer to their views.

Under PR, open debate between parties on fraught issues would be better than closing down argument behind the ruling party's cabinet doors. Under PR, a coalition would be strong enough to raise taxes to EU levels and lift public service standards. Under PR, we would be at the heart of Europe, not in Iraq.

The time will come, in some election not far off, when Labour will rue the day it let the childish hubris of a large majority blind it to this 21st-century necessity.